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Over the past year western barley nearby futures have ranged from a low of $111.80 per tonne in October 2000 to a high of $159.80 per tonne in September 2001, a rise of $48.00 per tonne. Statistics Canada's Stocks of Canadian Grain at July 31, 2001, which was released on September 13, 2001, supported recent price levels in barley. Total barley stocks fell to 2.454 million tonnes, which is below both the recent five and ten year averages. Statistics Canada releases its next production estimates on October 5, 2001.
In addition to strong futures levels, strong basis levels have also been observed. The Lethbridge cash basis to the nearby western barley futures ended the 2000/01 crop year at a $12.90 per tonne premium to the futures. This premium reflected an immediate demand for barley and a timing difference between the Lethbridge cash price, which is spot price, and the futures price. For instance, taking delivery of Oct futures means that the product may not be available for shipment until early November. Since August this basis has widened out to end the month at a $0.30 per tonne discount, similar to basis levels seen in the previous year.
The spread between WCE western barley futures and CBOT corn futures prices has shown significant volatility over the past few years and in particular over the past year. The currency adjusted Dec 01 futures spread has ranged from western barley being at approximately $20.00 per tonne discount to corn in early spring, to western barley being at approximately $25.00 per tonne premium to corn in September. This large range highlights the differences in the two markets and the inherent risk of cross hedging.
